There are several ways an FBO loses margin without knowing it. A customer service representative gives a fuel price over the phone to someone they have never spoken to before. A hangar tenant doing half the projected gallons pays the same rate as one doing double. A group account gets triple-discounted across fuel, rent, and services because everyone wanted the name on the ramp. None of these are dramatic failures. They are the quiet accumulation of undisciplined pricing decisions — what Anthony Banome calls death by a thousand cuts — and they compound into the gap between what an FBO is producing and what it should be.

The Blended Average Trap

The most common structural pricing problem Banome identifies is the use of blended averages. When an FBO averages its fuel margin across all account types, two things happen: the outliers that are dragging performance down become invisible, and the accounts that are performing well subsidise those that aren't. Three Gulfstreams paying the same hangar rate might be doing 25,000, 50,000, and 75,000 gallons respectively. At a blended view, the average looks reasonable. Isolated, the 25,000-gallon account is either in a different pricing conversation or it owes the FBO something it isn't currently getting.

Banome's prescription: break every account type into its own category and measure each one against what that category should produce. Home-based tenants. Transient traffic. Cargo. Government. Each requires a different service model, carries a different cost to serve, and should be priced accordingly. The pricing that justifies a home-based tenant relationship — a physical structure, ongoing ground services, utilities, a long-term lease commitment — has nothing to do with the pricing for a transient who is on the ramp for three hours.

What the Front Line Is Costing You

Banome describes a scenario that plays out at independent FBOs regularly: someone calls and asks what the fuel price is. The customer service agent gives it. The exchange takes 20 seconds, and both parties move on. The problem is that the CS agent has no idea who they just spoke to. The caller could be a legitimate client. They could be a former employee passing the information to a competitor. They could be a broker trying to establish leverage for a negotiation. The information they now have — your pricing — is intelligence that is worth something to the wrong person.

The correct policy, in Banome's framework, is that fuel prices are communicated via email, where domain matching provides at least a baseline of identity verification. When an FBO makes this change and then encounters a caller who becomes upset that they won't give the price over the phone, that reaction is almost always diagnostic: a legitimate client or a regular account knows who to ask and how to ask. The people who become frustrated by a request for email verification are typically the people who were trying to do something with the information that wasn't appropriate anyway.

The Group Account Problem

Large accounts — fractional operators, charter programs, corporate flight departments — carry an assumption of value that doesn't always survive close examination. The volume is real. The brand on the tail is recognisable. And so the discount comes: on fuel, because it's a group. On the hangar, because they're a big name. On services, because you want them to use all of it. Banome's term for this is triple discounting, and his observation is blunt: three discounted revenue streams that all populate the spreadsheet look like wins until you run the actual margin number and discover you've built a high-volume, low-return relationship that's occupying space and staff time that higher-margin accounts would gladly use.

The additional dimension of the group account problem is displacement. When a large group occupies significant ramp space at low-margin pricing, it crowds out the transient accounts that would have paid more per movement. The FBO that has a full ramp with a big program name looks operationally successful. The FBO that measures margin per square foot, per movement, and per gallon — and compares the group account to what the same space would have produced for higher-performing transient traffic — often discovers that the full ramp was the wrong ramp.

Setting Expectations in Writing

One of Banome's most consistent recommendations is documentation of expectations at the lease signing stage. Not penalties — expectations. When a new account comes on board projecting 50,000 gallons annually, that projection should appear in the lease as an expectation, with the pricing structure linked to it. If the account delivers 15,000 gallons in year one, the documented expectation creates a reference point for a non-adversarial conversation: this is what we said, this is what happened, here is what we need to do about the pricing.

The same principle applies to service commitments. An account that expects to be pulled from the hangar at any hour, on any shift, with specific handling requirements, is a fundamentally different service commitment than a standard tenant. When those requirements are built into the lease language and the cost of delivering them is reflected in the pricing, the relationship starts from an honest baseline. When they're agreed to verbally in the excitement of getting the account, the inevitable failure to deliver consistently becomes a relationship problem — one that could have been avoided with a more disciplined conversation at the beginning.

Margin in FBO operations is not lost through dramatic failures. It is lost through the accumulation of small, undisciplined decisions — prices given to the wrong people, accounts priced against the wrong baseline, groups accepted at terms that don't account for their full cost to serve. The FBO that builds a consistent measurement framework for each of these dynamics is the one that discovers the gap and has the data to close it.

Full episode with Anthony Banome here: https://flyironbird.com/private_jet_podcast/why-most-fbos-are-leaving-millions-on-the-runway

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